Summary of this article
Kamlesh Varshney, a Whole Time Member of Sebi emphasised the need for ensuring trust in the primary market.
Kamlesh Varshney addressed industry stakeholders at Merchants’ Chamber of Commerce & Industry (MCCI), in Kolkata on August 26, 2025.
Varshney also highlighted concerns regarding high valuations for large IPOs.
The primary market is witnessing robust investor interest in 2025. As many as three large public issues have hit D-Street in the first eight months of 2025. These include the initial public offerings (IPOs) of HDB Financial Services, Hexaware Technologies, and National Securities Depository which have raised Rs 12,500 crore, Rs 8,757.43 crore and Rs 4,010.95 crore, respectively. Amid this surge the Securities and Exchange Board of India (Sebi) has urged merchant bankers to maintain investor trust in the securities market by being ‘realistic’ about the valuation of large public issues.
Kamlesh Varshney, a Whole Time Member of Sebi in his address to industry stakeholders at Merchants’ Chamber of Commerce & Industry (MCCI), in Kolkata on August 26, 2025 emphasised the need for ensuring trust in the primary market. He added that trust between investors and the IPO-bound company is important for ensuring sustainable long-term growth. He also highlighted concerns regarding the valuation of public issues in instances wherein the price of newly listed stocks go down immediately after their debut on D-Street.
“When companies tap the capital market, or trading is carried out in the capital market, the most important part is to maintain trust, because trust is something which will build long-term relationships and lead to sustainable growth in the long-term. The issue is what should be the valuation (of IPOs)? There are concerns that some companies do high valuation and post listing their price go down,” Hindu Businessline quoted Varshney as saying.
He added that Sebi does not handle the price determination for IPOs. Pricing is determined by anchor investors and merchant bankers. Notably, mutual fund houses which get their money from retail investors participate in the anchor investor round. Thus, when anchor investors invest in public issues at high valuations, the retail investors end up losing money.
“We at Sebi don’t control the pricing aspect. That pricing aspect is determined by anchor investors and merchant bankers. Anchor investors also include mutual funds. Where do they get their money? Most of the money is from retail investors. So now, if mutual funds are also investing money in IPOs at a high valuation, it is retail investors who will lose money in future,” Varshney said.
He added that Sebi does not wish to interfere in the pricing process as it is subject to market dynamics. However, merchant bankers and anchor investors should be mindful about the valuation concerns, he said.
“That is one aspect that we tell merchant bankers and anchor investors to be careful about, because it is a market dynamics. We don’t want to interfere in market dynamics,” Varshney said.
Sebi is also organising a session for merchant bankers who are engaged in the process of writing the Draft Red Herring Prospectus (DRHP) papers for IPO-bound companies. He added that the move is aimed at increasing transparency in the DRHP filings and making the process more efficient by sensitising merchant bankers about necessary disclosures.
